Poland's LNG terminal secures final EBRD loan

Thursday, 4 Oct 2012 | 4:27 AM ET

SHARES

LONDON, Oct 4 (Reuters) - Poland's goal of reducing dependence on Russian gas took a step forward on Thursday after it secured the final investments to start construction of its first liquefied natural gas (LNG) terminal.

The European Bank for Reconstruction and Development (EBRD) on Thursday said it gave a 35 million euro ($45.16 million), 12-year loan to Polish gas grid operator Gaz-System to begin building a terminal expected to start importing gas from Qatar in 2014.

"What this project really represents is a choice for Poland to receive one third of its gas from a country other than Russia for the first time," EBRD Managing Director for Energy and Natural Resources Ricardo Puliti told Reuters.

EBRD's loan, along with 175 million euros already secured from the European Union, the European Investment Bank (150 million euros) and Poland's Gaz-System, sets the stage for construction to begin.

As well as receiving oil-indexed supplies from Qatar, two-thirds of the capacity at Poland's 5 billion cubic metre-per-year Baltic coast terminal will be reserved for cargoes imported on a spot basis from elsewhere.

"Given the strong links between the U.S. and Poland I would not be surprised at all if we saw some U.S. gas coming over," Puliti said.

It is hoped that supplier diversity will strengthen Poland's negotiating position in an ongoing row with Russia's Gazprom

over gas prices that are linked to oil.

Seaborne gas delivered by Qatari state-run exporter Qatargas, even though it is oil-linked, will likely undercut Russian pipeline gas and reduce its dominant position in Poland, Puliti said.

"By raising competition you are in a better position to re-negotiate long-term contracts with all suppliers," he said.

Russia's cash-strapped European customers are stepping up their opposition to oil-indexed gas supplies while the European Commission is investigating Gazprom over suspicions that it hindered the free-flow of supply across the continent.

Previous supply cut-offs of Russian gas have fuelled part of the debate in Poland about the country's reliance on Russian energy.

Its 15 billion cubic metre/year gas market relies on Russia for almost all of its imported supplies and poor connections to nearby European markets hamper attempts to diversify with pipeline supplies.